1. The Risk and Return of Growing Money

2. The Path of Money Human Capital Capital Assets Cash Flow Spend it
Donate it
Hold it
Invest it
LEND
OWN
You work for money
Your money works for you
Two Types of Capital
Four Choices for Cash Flow
Two Basic Investment Choices
PASSIVE
ACTIVE
Two Basic Positions
FINANCIAL RETURNS

3. Two Investment Choices
Lending
Those in which you lend your money to an organization which typically pays you a fixed rate of interest
Ownership
Those that you own a piece of some asset or company and have the ability to generate revenue and future profits

4. Considerations Lending versus Ownership Investments
You need current income
You don’t need current income
You don’t expect capital growth
You expect capital growth
You are willing to accept a lower return for a higher degree of safety
You are willing to accept a higher degree of risk for the opportunity for a greater return
You cannot ignore significant ups and downs because you might need your capital back soon
You can ignore significant ups and downs because you do not need your capital back soon

5. PASSIVE ACTIVE “Others Control It” “You Control It” Lending Ownership
Savings
Account
Stocks
Owner Financing (Lending on assets you’ve sold)
Business
Money Market
Accounts
Mutual
Funds
Private Lending (Lending on assets you didn’t sell)
Real
Estate
Money Market Mutual Funds
Minority Shares of Privately Held Companies
Precious
Metals
CDs
Collectibles
Government
Securities
Bonds
Annuities

6. Balancing Risk and Return
Highly
Risky
Alternative Investments
Long-term hold (5 yrs or more)
Own Business Real Estate Stocks
Moderately Risky
Medium-term hold (3-5 yrs)
Bonds Mutual Funds Annuities
Minimally Risky
Short-term hold (3 yrs or less)
Savings Alternatives Treasury Securities
More Risk
More Return
Less Risk
Less Return
FINANCIAL FOUNDATION
Financial Growth
Financial Protection (Insurance)
1. Goals
2. Budget
1. Health
2. Life
3. Records
4. Net Worth
3. Disability
4. Property/Liability
Sources: National Institute of Consumer Education – Eastern Michigan University/AIG
KW Research 6

7. A Closer Look at a Few Investment Options.
Futures
Collectibles
More Risk
More Return
Speculative Common Stocks
Junk
Bonds
Precious
Metals
Less Risk
Less Return
Owning Your Own Business
RE Investment Properties
Puts
And Calls
Blue Chip Common Stocks
Growth
Mutual Funds
Balanced
Mutual Funds
High Grade Preferred Stock
High Grade Convertible Securities
High Grade Municipal Bonds
High Grade Corporate Bonds
Fixed
Annuities
Treasury Securities
Certificates of Deposits
Money Market Mutual Funds
Money Market Accounts
Insured Checking and Savings Accounts
Note: Any uninsured investment vehicle is a risk
Source: Adapted from Investment Pyramid – Essex Corporation

8. Questions for Your Financial Advisor
Does my investment appreciate in value?
Will it generate income through interest or dividends?
Is it likely to outperform inflation?
What are some risks I might encounter?
Are there any tax advantages?
What fees and charges are involved?
Can I borrow against it?
Can I sell it quickly?
What are some economic factors that should affect my decision to buy, hold or sell?
Should I consider diversification?

9. Please read:
All information and investment strategies presented herein are intended and should be used for educational purposes only.  Nothing herein should be construed as investment advice.  You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.  All investments involve some degree of risk. All information provided herein is believed to be reliable, but may be subject to errors and omissions. 
Keller Williams Realty, Inc. ("KWRI") does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.  KWRI will not be liable for any loss or damage caused by your reliance on information contained in this presentation.  You are solely responsible for your own investment decisions.